Friday, 21 September 2007

Sainsbury's takeover enters final stages

Qatari can takeover J Sainsbury by Christmas after the supermarket’s board yesterday confirmed it had opened its books to Delta Two, which is planning a £10.6 billion takeover bid. However, investors appeared to retain some scepticism that a formal bid would emerge with shares rising by just 2% to 565p, below the 600p-a-share bid price, yesterday.

Main concern is whether Delta can secure agreement with Sainsbury’s pension fund trustees, who are thought to want between £2 billion and £3 billion in cash up front to underpin retirement benefits for the scheme’s 85,000 members. Talks with the trustees are expected to begin early next week. The good news for Delta Two is that the Sainsbury family, who retain an 18% share in the company, appear to be comfortable with the 600p-a-share bid price, particularly as the fund has confirmed plans to include a 3p-a-share dividend in respect of the period ending October 6.

Delta Two is expected to take about three weeks to complete due diligence and an offer is likely to be put to be put to shareholders by mid October. The offer would take 60 days to complete, so that if everything runs smoothly it could be completed by mid-December

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